WASHINGTON – Taxpayers will see up to $600 in immediate tax relief – in the form of mid-summer rebate checks – as President Bush’s $1.3 trillion tax cut was finalized in Congress last night.

“Tax relief is on the way,” crowed Sen. Phil Gramm (R-Texas).

The package phases out the estate tax by 2010, eases the marriage penalty, cuts most income-tax rates, and doubles the $500-per-child tax credit.

Congressional leaders huddled for hours before working out the differences between the House and Senate versions of the tax-cut plan – the largest since Ronald Reagan slashed taxes in 1981.

President Bush hailed the compromise. “The American taxpayers will have more money in their pockets to save and invest, and the economy will receive a much-needed shot in the arm,” he said.

The House and Senate are expected to pass the compromise bill today. Then it will be sent to the White House for Bush’s signature.

Most of the reductions will be phased in over 11 years. But some of the new tax rates will take effect July 1, which should mean more take-home pay this year as employers withhold less tax.

The bill also sets a new 10 percent rate on the first portion of every taxpayer’s income. Single people will pay $600 on the first $6,000 of their income; married couples will pay $1,200 on their first $12,000.

The new bottom tax bracket will be imposed retroactively to Jan. 1. That means individual taxpayers can expect rebate checks of $300, single parents will get $500 and married couples will receive $600.

Congressional negotiators also lowered the top 39.6 percent tax rate to 35 percent – still higher than the 33 percent rate Bush sought. The top tax rate applies to those with annual income above $297,350.

Most other tax rates will drop by 3 percentage points.

The plan also raises over time the amount of tax-free contributions allowed to IRAs and 401(k) plans.

Bush had promised a $1.6 trillion tax cut during the campaign, but Democrats and moderate Republicans balked and added measures to help lower- and middle-income earners.

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THE TAX PLAN

* Total value: $1.3 trillion

* Highest rate cut to 35 percent

* Gradual repeal of the estate tax

* Easing of the marriage penalty

* Doubling the $500 per child credit

* Immediate impact this year about $600 for married couples and $300 for singles.

(Source: Congressional negotiators, who said the plan was still subject to minor changes.)